Expanding into new markets like Malaysia comes with unique challenges, especially when it comes to hiring and managing employees. Many foreign companies turn to HR outsourcing solutions such as Employer of Record (EOR) and Professional Employer Organization (PEO) to simplify their workforce management. But what are the key differences between these two services, and which one is the best fit for your business?
In this guide, we’ll explore EOR vs. PEO, their benefits, and why it is the ideal solution for foreign companies looking to establish a presence in Malaysia.
What Is an Employer of Record (EOR)?
An Employer of Record (EOR) is a third-party organization that legally employs workers on behalf of a company in a foreign market. The EOR handles all HR-related responsibilities, including:
- Payroll processing
- Employee benefits administration
- Tax and statutory compliance
- Employment contracts
- Work visa & immigration processing
The hiring company retains control over day-to-day operations and employee tasks, while the EOR takes on the legal and administrative burden of compliance and payroll.
Best for: Foreign companies looking to expand into Malaysia without setting up a local entity while ensuring full compliance with Malaysian labor laws.
What Is a Professional Employer Organization (PEO)?
A Professional Employer Organization (PEO) is a co-employment arrangement where the PEO partners with a business to share HR responsibilities. However, unlike an EOR, the hiring company must have a registered local entity in Malaysia before engaging a PEO.
A PEO typically provides:
- HR administration & compliance support
- Payroll and tax processing
- Employee benefits and insurance
- HR policies and risk management
Best for: Companies that already have a local entity in Malaysia but want to outsource HR and payroll functions.
Key Differences Between EOR and PEO
| Feature | Employer of Record (EOR) | Professional Employer Organization (PEO) |
|---|---|---|
| Legal Employer | EOR is the official employer on paper | The hiring company is the employer |
| Entity Requirement | No local entity required | Requires a registered Malaysian entity |
| Compliance Responsibility | EOR manages compliance | Shared compliance responsibility |
| Payroll & Taxes | EOR processes payroll and handles tax filings | The company is responsible, but PEO assists |
| Best for | Companies expanding into Malaysia without an entity | Companies with an entity that need HR support |
Why Choose an EOR Over a PEO?
For foreign businesses looking to hire employees in Malaysia without setting up a legal entity, an EOR is the most efficient and compliant solution. Here’s why:
- Faster Market Entry:
No need to go through the lengthy company registration process. - Cost-Effective Expansion:
Save on entity setup, legal fees, and administrative costs. - Regulatory Compliance:
EORs handle all tax, labor law, and statutory compliance. - Workforce Flexibility:
Quickly hire and scale your team without long-term commitments.
Amaze Advisory: Your Trusted EOR Partner in Malaysia
At Amaze Advisory, we specialize in providing seamless EOR services tailored to foreign companies expanding into Malaysia. With a deep understanding of Malaysian labor laws and a strong track record of supporting SMEs and multinational firms, we ensure a hassle-free hiring process while keeping your business compliant.
Our end-to-end EOR solutions cover:
- Fast and compliant employee onboarding
- Payroll processing and tax management
- Employee benefits and statutory contributions
- HR compliance and legal support
Start Expanding into Malaysia Today!
If you’re a foreign company looking to hire employees in Malaysia without the complexities of setting up a local entity, an EOR is your best option. Let Amaze Advisory handle the legal and administrative aspects of employment so you can focus on growing your business.
Contact us today to learn how our EOR solutions can help you expand seamlessly in Malaysia!
